NNPC’s trading subsidiary relocates from London to Dubai

Nigeria National Petroleum Corporation (NNPC’s) trading subsidiary Duke Oil Service has relocated from London to Dubai in order to move closer to its Asian markets who are mostly buyers of Nigeria crude oil.

Duke Oil, an international oil trading company wholly owned by NNPC, was established to serve as a vehicle for bringing NNPC directly in contact with the international oil market for strong internal competence and value-adding to its oil and gas business, NNPC said.

Sources with knowledge concerning the matter told Reuters that in a filling with United Kingdom register of companies called Companies House, Duke Oil Services said it would wind down its operations in the second quarter of this year and move its office to an unspecified new country.

Stakeholders said the move by Duke oil has tax advantages over keeping the office in London while placing the traders in Dubai will also enable Duke travel more easily between the new office, Nigeria, Europe and Asia.

India is a significant buyer of Nigerian crude, which is largely light and sweet, rich in gasoline and diesel and low in sulfur, and meets the needs of Indian refiners while Asian refineries are also increasingly selling refined oil products such as gasoline and diesel to Nigerian buyers.

“Duke Oil has always being clouded under lots of issues surrounding corruption and irregularities so we hope this relocation will make them more transparent,” Charles Akinbobola, energy analyst at a Lagos-based energy firm Sofidam Capital said.

Mele Kyari, immediate past general manager of state-owned NNPC’s crude oil marketing division said  at a conference in Singapore last year that NNPC’s trading arm Duke Oil will be given more equity [up to 80percent] to directly trade and market the country’s crude in the next few years.

Recall in 2017, Nigeria’s House of Representatives Adhoc Committee investigating revenue leakages in the Department of Petroleum Resources (DPR) and other subsidiaries of the Nigerian National Petroleum Corporation (NNPC), beamed it’s searchlight on Duke Oil over non remittance of over N6 trillion revenue.

“In the ensuing public hearings, different actors disagreed wildly on the types of hydrocarbons involved, the identity of the NNPC subsidiary that sold them and the value of what was sold—with reported estimates ranging from $205 million to approximately $16 billion,” Natural Resources Governance Institutes (NRGI) said.

According to NRGI, NNPC routed 144,010 barrels per day through two offshore subsidiaries, Duke and Calson, in 2012 – oil worth $5.9 billion. Neither NNPC nor the subsidiaries themselves disclose how much they earn or how they distribute their earnings.

Three months ago, NNPC inaugurated a new office complex for its crude oil trading subsidiary, Duke Oil (NNPC Trading) at Nigeria commercial capital, Abuja after series of criticism facing NNPC for registering Duke oil in Panama.

Duke Oil Company Incorporated was registered in Panama in 1989 to engage in crude oil and petroleum products trading across the full stretch of oil trading and price risk management instruments in the international market. The London branch office was registered in the UK in 1992 as a service company. It was moved to Paris for a short period in 1997 but returned back to the UK in 1998.

“Duke Oil has the largest NNPC crude term contract to lift 90,000barrels of crude oil per day but it has no physical office in Panama or in Nigeria for such operations; rather, it uses the office of a law firm; Arias, Fabrega & Fabrega at Bank of America Building, 50th Street, Panama as a front,” FixourOil, a nongovernmental organization monitoring the oil and gas sector said.

FixourOil noted that historically, crude oil and other petroleum products allocated to Duke Oil by NNPC are reallocated to cronies of the government of the day and other vested interests for enrichment while NNPC Group’s balance sheet takes a hit.

Oil is still king in Africa’s biggest economy as Nigeria’s oil sector grew by 5.15 percent, while the economy expanded 1.94per cent  from 2.10 percent in Q1 2019.

DIPO OLADEHINDE